Moody’s sees brisk growth in Q2

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Category: Banking & Finance

Published on Tuesday, 27 August 2013 19:17

Written by Bianca Cuaresma

The Philippines was seen persisting on a growth path rated brisk by Moody’s Analytics in the second quarter, citing the strength of domestic demand and the success of the business-process outsourcing (BPO) industry during the period.

Moody’s Analytics, a division of Moody’s Corp. that provides expert economic and consumer credit analysis, sees the Philippines to further ‘thrive’ in the second quarter to hit 7.2-percent gross domestic product (GDP) growth year-on-year.

“The Philippines likely recorded another smashing quarter in the three months to June. Despite softness in the global economy, we look for 7.2-percent year-on-year GDP growth, following the March quarter’s 8 percent. We expect full-year GDP growth to be around 6.5 percent in 2013 and 2014, making the Philippines one of the world’s fastest-growing economies,” Moody’s Analytics said.

Moody’s Analytics said the BPO industry played a key role in keeping the country’s economy afloat despite the weak global growth projections.

“The Philippines accounts for 15 percent of the global BPO market… . Three years ago, the Philippines became the world’s largest provider of offshore voice services. The rise of BPO has widespread benefits for the economy, including employment opportunities for the university-educated, who have tended to move abroad because of the lack of prospects at home,” Moody’s Analytics said.

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The research and analysis unit added the BPO industry were to hit more or less 6.8 million in employment numbers by 2020, about 15 percent of the country’s total employment.

It also said the manufacturing industry should prove strong amid solid domestic demand, offsetting the weakness seen in exports. Private consumption is also getting an additional boost from strong remittances, which, according to Moody’s Analytics, held up well through weaker global demand.

The research arm also lauded the Aquino administration for economic reforms and bringing back investor confidence in the country. It added that a crucial part of the economic sustainability of the growth and reforms that the country is now experiencing lies greatly on the back of the next Philippine president in 2016.

“President Aquino is rightly credited with helping turn the Philippines’ economy away from perennial disappointment. Since taking helm in 2012, [Mr.] Aquino has set the economy on the right course via infrastructure development, with a focus on upgrading transport links, an anti-corruption push, a drive to halt tax avoidance and improved government coffers. Continued success will depend on who takes the reins when [Mr.] Aquino steps down in 2016,” it said.